IT Employment

Tech companies have highest turnover rate

According to PayScale's most recent survey, employee turnover rate among Fortune 500 companies is greatest in the IT industry.

According to PayScale’s recent employee turnover report, the employee turnover rate among Fortune 500 companies in the IT industry is the highest among all industries surveyed. Here’s PayScale’s list of companies with the shortest tenure:

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As you can see, some pretty prominent tech companies are at the top of the list (Amazon, Google, Mosaic, etc.) Now, the question is, why? It could be that the companies suck, I don’t know. But it’s hard to say that about Google, who offers its employee perks that seem almost fictional (onsite pool tables, ping pong tables, video games, onsite haircuts, and onsite gyms with swim-in-place pools).  

Could be that the jobs are high stress. I can see where working for these highly competitive companies could cause stress. But, again, I don’t think it’s that. IT pros kind of know going into their line of work that stress is going to be part of the bargain.

I’ve noticed that here at my company we have a high churn rate in the IT department. There is not a day that goes by that I don’t encounter a complete stranger in the break room. (Strangers that always appear to be about 12 years old, by the way. What’s the deal with that?)

So what are the reasons for the high turnover rate in tech companies? For one, the job outlook is picking up and smart IT pros are finding that they have their pick of IT jobs. Their skills are highly marketable—why not take advantage of that?

But according to Leonid Bershidsky in a piece he wrote called Whyare Google employees so disloyal?, there may be something else going on:

“Technology companies that hire the smartest young people around all but guarantee themselves a high churn rate. A lack of employer loyalty is a defining feature of Generation Y. No matter how satisfied these highly marketable young minds may be, no matter how much they enjoy the free meals and hybrid car subsidies, they will jump ship as soon as they get bored or get a better offer elsewhere.”

It would be easy to take a “kids these days!” approach like this. But, really, if you’re in your 20s and have cutting-edge IT skills, then why not explore different companies? If you’re not going to do it at the beginning of your career, when are you? Job-hopping becomes a little more complicated after the house and kids come along.

Also, it’s not like Google and their ilk are buying a bunch of gold watches with plans to hand them out at retirement ceremonies. Modern companies, as far as I can see, don’t put a lot of heartfelt promise into long-time employment for their workforce.

In other words, not many young people now go into a company with the expectation, like guys returning from WW II,  of that’s where they’ll spend the rest of their working lives. Part of that may be because of their age group “personalities,” but it may also be because they haven’t exactly seen the concept of loyalty practiced by the companies themselves. They’ve probably lived through layoffs experienced by their parents.

Also, it doesn’t appear that tech companies are complaining about the churn rate. After all, if a bright mind stays for a while and then leaves, it’s likely that another bright mind will step in and help take companies places they haven’t considered.



9 comments
Jodi Beuder
Jodi Beuder

Interesting topic. It's true that the young and well-educated seem to be more antsy and maybe even ambitious? But what if the companies they land jobs in immediately invest into these "kids" and give them some training that only that company can provide? Training that would develop the person's interest in staying with the company; training that would want them to do a good job for that company. We have a quiz that any company can use and ask themselves this: Is it a Training Issue? http://www.impactlearning.com/is-it-a-training-issue/

Oracle Architect
Oracle Architect

I would say that all of us in IT are always passively looking for a job.  If you're worthwhile at all, recruiters are knocking on your door constantly.  The churn may not be about the company losing the employee but more about the large number of options out there looking for the next great mind.

Also, really good IT folks get bored easily.  (If not, then they need to be doing something else.)  Or we shunted to a project that isn't what we want to do.

What seems silly/stupid is that the cost of replacing one of us is so large ($50k+) that it would only make sense for companies to do a bit more than the minimum to keep their IT staffs in place.  Sadly, that seems not to be the case.  There's an army of us out there so any of us can replaced quickly.  Well, our spot on the roster can be replaced.  But the knowledge we have can't be replaced so easily.  Oh well.  There's no understanding HR.

rafamd
rafamd

Another reason for that is that besides the crisis, we're living a full employment period in IT. People wouldn't be leaving their jobs so easily if there were a high rate or unemployment out there. After all this is good sign.

mckinnej
mckinnej

It's pretty clear that for several of them, it's because their pay sucks. I pay my entry level service desk folks more than some of those companies pay and we're in a low cost of living area. My guess would be that most of these companies operate in or near metro areas which means a higher cost of living. Not sure where Ross has its IT folks, but $23K isn't enough to live on even here. I would be looking for a job while I was still signing the paperwork with them.

As for loyalty, that went away with pensions. The creation of the 401K and saddling individuals with the responsiblity for their own retirement was the death of loyalty. There is no point to it. What does it get you these days other than a few more days of vacation? You'll get a better raise by jumping to a different job. Almost certainly the only way you'll get a promotion. Heck, if you want the time off, take it between jobs.

Corporations got in bed with the government to create this environment, now they have to deal with the unexpected consequences. That's how life works. I doubt anyone has any sympathy for them.

Imprecator
Imprecator

Loyalty DOESN'T PAY in IT. I don't understand why it's so surprising.

Tony Thijs
Tony Thijs

It will take a new generation of managers to turn that around

Shawn Quinn
Shawn Quinn

pretty high. the company does not value its people, so they leave as soon as they find something that pays 20% more.